Home / KIRK'S BLOG / What is inflation?
What is inflation?

What is inflation?

What is inflation?

According to dictionary.com, inflation is a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency.  So a candy bar going from 35 cents when I was a kid to 99 cents today—that is a rise in prices, and many people would define that as inflation.  However, that is wrong! Inflation is not rising prices. Inflation is an increasing money supply. Everything that we get from foreign countries as an import is basically going to have a cost that is a function of our money supply. If we keep printing and printing and printing and devaluing our currency, they're going to want more of it. So therefore, they're still going to sell us the TV, but it’s going to cost a lot more. They're going to want more of our junk currency in exchange for it. That's why rising prices are a symptom of inflation.

 

0 comments

Leave a comment